We receive a lot of enquiries from relatives who have been appointed to act as an Attorney under a Lasting Power of Attorney for a loved one, including questions on Power of Attorney Gifts.
The position of Attorney is one of trust since the Lasting Power of Attorney empowers them to step into the shoes of the incapacitated person (the Donor) and act on their behalf. The law requires the Attorney to act in that person’s best interests at all times, and to ensure that they do not personally profit from their actions.
The most regular enquiry we get relates to an Attorney’s power to make gifts on behalf of the Donor. There is a lot of confusion about Power of Attorney Gifts and how much the Attorney can give away. In addition, we are often asked if Attorneys can undertake Inheritance Tax mitigation for the incapacitated person by making significant gifts to reduce the value of their estate.
The rules set out in the Mental Capacity Act 2005 only permit proportionate and reasonable gifts on ‘customary occasions’ (such as birthday, wedding, anniversary or Christmas gifts) to persons who are related to (including the Attorney) or connected to the incapacitated person. Attorneys can also make gifts to charity if the incapacitated person has done this in the past.
Recently, a Court authorised a gift of £7 million to the son of a 72 year old woman who suffers from dementia. This was both surprising and a little concerning because, in my view, publicity about this case will only add to the confusion about the rules about gifts. If you do read the case though, it becomes clear that this was an unusual set of circumstances.
The Court took the view that after the gift of £7 million, the mother would still be left with £10 million in her estate, which should be more than enough for her future needs.
The Court did comment that whilst the mother would see no direct benefit from saving tax on her estate when she dies, it was persuaded by the evidence submitted that it would have been the mother’s wish to enhance the amount that her beneficiaries would receive.
As an Attorney, if the gift you wish to make for the Donor does not fall within the rules, you will need to make an application to the Court for authority to proceed.
The process can be time-consuming and expensive, it is a question of assessing whether it is worthwhile incurring the costs of a Court application and, in particular, gauging your chances of success.
Astle Paterson’s Private Client Team has experienced lawyers who can advise Attorneys about their duties and powers under a Lasting Power of Attorney.
If you would like advice from the experts:
Table of Contents Friends or family membersThe alternative: A professional executorPitfalls of a professional executor: What to watch out forFollowing ...Read More
There are a number of myths and misunderstandings about how Inheritace Tax works; that can be a problem with the ...Read More
The practice of “DIY probate” may seem like a cheaper solution for lay executors, but it may in fact cost ...Read More
As lawyers, we are seeing an increasing number of cases where family members are pooling funds for shared ownership houses ...Read More
As of 6th April 2018, it has become even more beneficial for couples to invest in an Individual Savings Account ...Read More
Astle Paterson, Clay House,
5 Horninglow Street, Burton upon Trent
Staffordshire DE14 1NG
Tel . 01283 531366
Book an appointmentBurton on Trent | Uttoxeter
Business & Commercial • Conveyancing • Family • Litigation • Wills, Inheritance Tax & Probate • Employment